Coles opens new front in supermarket wars

Adele Ferguson -Apr 19, 2012

Coles hopes the loyalty card is the next step in its bid to claw back market share and win customers. Photo: Sasha Woolley

Coles has taken the supermarket war with Woolworths to loyalty programs, with the relaunch of its FlyBuys card which will enable customers to cash in loyalty points and save hundreds of dollars a year on their grocery bills.

The supermarket giant will send the new FlyBuys card to almost every household in Australia on Monday and blitz the airwaves with ads pushing the new scheme.

It is one of the largest mail outs in Australian history with more than eight million FlyBuys cards sent out.

It will cost the company tens of millions of dollars but Coles boss Ian McLeod believes the loyalty card is the next step in its bid to claw back market share and win customers.

The new card, which will carry over points from its existing FlyBuys card, has been simplified and beefed up so that each point is worth 50 per cent more for customers. Customers will now earn one point per $1 they spend and, when they earn enough points, can cash the points in at the till.

"Instead of waiting three years to earn enough points to buy a toaster, from day one, customers can start earning," Mr McLeod said.

Coles has also launched a world first, My5, which gives FlyBuys customers 10 per cent off five products of their choice. A new website has been set up with 5000 products and customers can pick five and get 10 per cent off the price. There will be no points expiry, unlike the existing point system which expires after three years.

Customers will go online and covert their points into FlyBuys dollars, and use them at the check-out for money at Coles, Kmart, Target, Liquorland, 1st Choice Liquor and Coles Express.

Coles has also partnered with webjet, Telstra, AGL and others, and said that combined points from partners could save customers at least $400 a year.

By spending $133 a week at Coles and buying five My5s, customers get 10 per cent off five products of their choice, saving $200 a year. If customers also use Telstra, AGL and a few of the other partners they could save at least another $200 a year.

The FlyBuys push is the next step in the Down Down campaign, which has already taken market share from Woolworths.

FlyBuys was launched more than 20 years ago and has 5 million active cardholders. The company expects to more than double this.

Woolworths has a loyalty program with Qantas to earn frequent flyer points. Woolworths' card can also be used to buy discounted petrol.